In the new budget speech, the Finance Minister gave the RBI the right to regulate housing finance companies.
Apart from being a National Housing Bank (NHB), a refinance and a lender, there is also a manager of the housing finance sector, which gives some diverge and tough orders to the NHB.
I am proposing to return the managing authority on the housing sector.In addition, Sitharaman gave RBI more teeth to manage non-banking finance companies(NBFCs). And, these measures will be included in the Finance Bill.
RBI is the manager of the NBFCs. However, RBI doesn’t manage NBFCs properly it has its limited managing powers. Proper proposals are being kept in the Finance Bill to strengthen the regulatory authority of the Reserve Bank of India over NBFCs.
When the governor of the reserve bank of India said that the central bank could take the step to overcome the ongoing crisis in non-banking financial institutions last month then this move comes.
The governor said, “We will not hesitate to take action for not to adversely affect financial stability.” housing finance companies come under the range of RBI, all are worried because they are overwhelmed the financial health of the banks, which they manage.
DHFL one of the largest housing finance company of our country entered into the red zone last month. Because of it, the debt is lowered to the default area as ICRA and further down.
The housing finance sector is in tension because many of them are not giving loans and many are facing their financial problems.there are total 82 HFC’s in India and almost each (90%) are controlled by five popular company.